Penny Stock Trading Strategies

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Tim Sykes discusses the basics of trading penny stocks.  He believes that penny stock prices are primarily driven by technical analysis as opposed to fundamental analysis since these companies have few business fundamentals.  When trading penny stocks, he keeps it simple by looking to buy stocks which are making higher highs and sell stocks, or short, making lower lows.  This strategy is a self fullfilling prophecy which is very reliable.

He only plays stocks that are in play, or very hot, with heavy volume.  One should be willing to trade any company in any industry but should realize that there is sector specific risk in industries such as oil which is tied to the price of crude. 

When trading penny stocks, look for gains of .50 to 2 dollars and take your profits.  Also, be willing to go long or short; your goal is to ride a trend.

Finally, Sykes covers the different types of charts; bar, line, area, and candlestick charts.  His favorite charting method is candlestick charts as it provides more clarity into the price structure of a stock.

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